Latest news with #RegulationBestInterest
Yahoo
08-05-2025
- Business
- Yahoo
The lucrative, murky revenue sharing between fund and wealth managers
An SEC enforcement push began with a self-reporting program in 2018 and grew to involve more than 100 cases of wealth management firms' inadequate disclosures of the 12b-1 marketing and distribution fees collected from investors out of the funds' expense ratios. But revenue sharing falls outside of the expense ratio, and it hasn't sustained the same type of regulatory crackdown. In a now-overturned judgment one large company was ordered to pay $93 million over its revenue-sharing practices; the case is now back with lower courts. When it comes to picking among mutual funds with similar strategies, holdings and performance, the considerations may begin with the expense ratio or any transaction or commission costs. Then there are questions about any third-party payments involved with one fund or another and whether and to what extent they may affect overall returns. Those questions remain hard to answer, despite Regulation Best Interest going into effect nearly five years ago and SEC guidance to wealth management firms on mitigating and disclosing revenue sharing. Revenue sharing involves payments from fund managers to wealth management firms that recommend their products. The practice takes many forms and presents various risks to investors due to the incentive to sell products from issuers that pay revenue sharing to the so-called intermediary companies building clients' portfolio allocations. But as other forms of product distribution payments taper off or disappear, revenue sharing payments keep streaming into some of the largest wealth management firms. "So in the financial advice industry, there's a lot of conflict of interest," the financial professional said, according to the U.S. Government Accountability Office study, released last August. "First, you want to be wary of any commission-driven brokerage kind of advisors. There are some advisors out there like that, they might put you in the mutual funds that have a kickback fee to them, so they're getting paid through the mutual fund, so they might not be putting you in the lowest-cost, best possible thing for you." When a government watchdog sent undercover researchers (posing as a 60-year-old prospective client with $600,000 in retirement savings) to ask 55 financial professionals about their industry conflicts of interest, a dozen responded that they had none. But one of the financial professionals quickly flagged practices like revenue sharing, describing them more clearly and more candidly than the often confusing disclosures mandated by regulators. Revenue sharing is one of the wealth management industry's murkiest and most persistent conflicts of interest, with billions of dollars likely changing hands each year. Story Continues Some argue that revenue sharing should be eliminated entirely, while others see it as another closely scrutinized industry area subject to substantial disclosure requirements. Conflicts of interest arise because revenue-sharing payments compensate the recommending intermediary firm out of the profits earned by a fund manager on their clients' investments. The implications of those arrangements can be profoundly complex, thanks to the many factors involved with clients' fund decisions and the potentially blurry relationships between advisors' compensation models and their counsel to customers. Revenue sharing is one of various industry arrangements that beg the need for advisors to have nonjudgmental, productive discussions through a "Socratic debate about the benefits of different providers and what the conflicts might mean for the clients," said Sara Grillo, an advisor lead generation consultant who launched the Transparent Advisor Movement in 2022. That professional network aims to bring together "the most ethical, logical, and fair financial advisors that the industry has ever seen," according to its website. She believes more advisors and other industry professionals would discuss practices like revenue sharing if they were not "scared to look stupid" about the complicated arrangements or afraid "to find out that I'm not as fair as I think I am." The planning profession should "bring it all out in the open" so that investors and advisors can decide for themselves, Grillo said. "I think, if we do that, things will change. But we can't be scared to have the conversation," she said. "We have to be willing to look ourselves in the face and say, 'Am I really doing what I'm saying I'm doing for them?" READ MORE: Setting the standard: The first 42 enforcement cases under Reg BI The extent and origins of revenue sharing Those conversations may prove anything but easy, though, when there are so many unknowns about revenue sharing. To better understand current practices, Financial Planning reached out to nine of the largest wealth management firms in the industry that disclose revenue sharing arrangements . Two referred inquiries to the companies' disclosures, four declined to comment and the other three didn't respond to emails. Only Edward Jones and Ameriprise shared the exact amounts they received in revenue sharing payments for a given year: A combined $652 million in 2024 and "cost reimbursement payments" in 2023. Merrill , in a disclosure regarding "marketing services and support fees" from fund firms, mentioned that BlackRock had paid over $60 million in 2023 but didn't provide the total from it and other product providers that had sent revenue sharing payments. The other half dozen companies' disclosures left that number out as well. The available totals added up to a small fraction of the firms' overall revenue but suggested revenue sharing payments across the entire industry likely reach several billions of dollars every year. Mark Quinn, director of regulatory affairs with Cetera Financial Group Revenue sharing payments began in the industry as much as 40 years ago, and the SEC has "never taken the position that they're inappropriate or shouldn't happen," according to Mark Quinn, director of regulatory affairs with Los Angeles-based Cetera Financial Group , one of the largest companies in the independent brokerage channel of the industry. Asset management firms aimed to open sales distribution channels through the ranks of independent advisors. And wealth management firms sought revenue streams enabling higher payouts to retain advisors who receive a share of the business that they generate from their base of clients. Independent brokerage firms in particular "pay a very high percentage" of the annual revenue, Quinn noted. That's where revenue sharing from fund companies entered into the equation. "We're looking to collect as much as we can, and they're looking to pay as little as they can, and somehow the market finds equilibrium," Quinn said. "It would be extraordinarily difficult for independent firms paying out that much to really be profitable without ancillary revenue sources." READ MORE: Edward Jones wins $3.5M award against Commonwealth team A point of contention over conflicts of interest Others disagree with that perspective. The industry's current revenue sharing practices call for "aggressive enforcement of the rules that are in place — fiduciary duties and Regulation Best Interest" — alongside new legislation in Congress, according to Corey Frayer, the director of investor protection with the Consumer Federation of America , a research and advocacy group composed of more than 250 nonprofit consumer organizations. "Congress could restore a lot of faith in markets by banning these arrangements entirely, the same way they could restore faith in government by making it illegal for members of Congress to trade stocks on non-public information," Frayer said in an email. "We know from experience that, not just investors but the entire market, benefits when transactions happen at arm's length, conflicts are weeded out, firms are in competition and not in cahoots with each other and everyone's incentives are transparent. When you're both providing advice and managing assets for investors with varied interests there are some unavoidable conflicts; it seems like common sense to eliminate the unnecessary ones." READ MORE: Cambridge agrees to settle SEC charges for $15M SEC calls for revenue sharing clarity, not elimination Representatives for the SEC declined to discuss the topic in general or comment beyond the agency's public filings in the closely watched case it first filed in 2019 against Commonwealth Financial Network's registered investment advisory firm over its disclosures about revenue sharing and other conflicts in its mutual fund recommendations. The industry has pushed back against what trade groups often refer to as "regulation by enforcement" or "rulemaking by enforcement," and firms have ramped up production of disclosure documents to inform investors, but revenue sharing continues to be shrouded by the resulting volumes of legalese. Many wealth management companies in the RIA channel of the industry do no revenue sharing at all. Others accept the payments in both retirement accounts (for which advisors must abide by the fiduciary duty, placing clients' interest above their own) and in brokerage holdings (where the advisor is subject to Reg BI's lesser obligation to act in customers' best interests). A third group has explicitly ended the practice in retirement accounts but not brokerage ones. In a 2022 staff bulletin about reducing and explaining conflicts of interest, the SEC specifically and repeatedly cited revenue sharing as a conflict but stopped short of calling for firms to end the practice. "A firm's product menu can have a significant impact on the conflicts of interest present in its business model," the bulletin stated. "The staff believes that firms should carefully consider how their product menu choices — which could include limitations such as offering only proprietary products (i.e., any product that is managed, issued, or sponsored by the firm or any of its affiliates), a specific asset class or products that pay revenue sharing or feature similar third-party arrangements — comply with the firm's obligations to act in the best interest of retail investors when providing investment advice and recommendations and to disclose conflicts." READ MORE: Retirement plan analysis suggests rampant fiduciary breaches A 'common' conflict of interest for investment advisors Research relating to revenue sharing reveals why many experts see it as a cause for concern. It's one of several conflicts that "are common in investment advice, including advice on transactions involving retirement assets" such as 401(k) plans and individual retirement accounts, according to a report last year by the U.S. Government Accountability Office, an independent watchdog agency that reports to Congress. The IRS agreed with the report's recommendation to create its own process outside of Labor Department referrals for identifying transactions that are prohibited under the fiduciary rules of the internal revenue code (IRC) and subject to excise taxes, according to Tranchau "Kris" Nguyen, director of education, workforce and income security issues with the GAO and the primary author of the report. "Revenue sharing is one of a variety of financial interests that can be present when retirement investors are receiving recommendations on 401(k) or IRA savings," Nguyen said. "DOL officials told us employer plan fiduciaries may use revenue sharing in employer plans to defray other plan expenses in an economical way. However, revenue sharing is also one of the conflicts of interest that firms disclose. To receive additional compensation associated with IRA product recommendations, a fiduciary under the IRC might need to comply with prohibited transaction exemption provisions aimed to protect retirement investors." READ MORE: Texting is the new email for RIA client transitions A range from most to least conflicted Six years ago, research firm Morningstar used a spectrum to explain what it called "a variety of opaque arrangements" between fund and wealth management companies, characterizing the revenue sharing on a spectrum from the least to the most conflicted conduct, depending on the amount of the payments and the degree they're tied to sales. Educational expenses for teaching financial advisors about the products showed up as the conduct that was "least likely to be conflicted," followed by fees for being listed on a wealth management firm's fund menu, for accessing its data on clients' investment choices or for placing vehicles on a select listing. The "most likely to be conflicted" form of revenue sharing stemmed from payments based on sales, client assets or the number of accounts investing in the fund companies' products. The report's conclusion — that investors would benefit from greater transparency around revenue sharing — still holds true today, according to Lia Mitchell, a senior analyst of policy research with Morningstar who co-authored the report with Jasmin Sethi and Aron Szapiro. The report also found that the industry is moving away from some of the most conflicted revenue sharing practices. That remains the case today as well, Mitchell noted in an interview. The "bundled" funds of yesteryear that included sales loads and 12b-1 distribution fees are losing out to cheaper "unbundled" products with no arrangements other than the underlying expense ratio and "semibundled" vehicles that have revenue sharing or subaccounting fees but no traditional sales and marketing payments to intermediaries. But Mitchell acknowledged that revenue sharing and other incentives tied to fund recommendations could generate confusion among investors and advisors. "It's, ultimately, how are you paying for the different services that are connected to the investment process?" she said. "I don't think it's that a bundled fund is necessarily worse for investors, but it can be less transparent." READ MORE: Independence? It depends The hidden scale of revenue sharing Still, the full picture on revenue sharing is unclear. Data about it is "notoriously difficult to obtain," given the varying amount of information about the size, payers and recipients of the payments in fund prospectuses and wealth management company disclosures, according to " The Worst of Both Worlds? Dual-Registered Investment Advisers," a working academic paper first posted in December 2019 by Nicole Boyson, a professor and the group chair of finance courses at Northeastern University's D'Amore-McKim School of Business. Boyson's study focused on firms registered as brokerages and RIAs — the form of affiliation used by most advisors in the industry. Regardless of the impact of Reg BI on the brokerage side of the business, the "conflicted dual registrants oversee trillions of dollars of retail client assets under management that are already subject to a fiduciary standard," Boyson wrote. Many "fall short of the spirit of the fiduciary standard," she concluded, citing the potential conflicts from revenue sharing as a key reason. "Mutual fund management companies (families) may make revenue sharing (profit sharing) payments to advisors that sell their funds," Boyson wrote. "These payments are in addition to commissions and are at the discretion of the mutual fund family. Unlike commissions — which are paid directly from the mutual fund's expenses — revenue sharing payments come from fund family profits. Revenue sharing payments can create a conflict of interest for advisers to sell funds from families that pay revenue sharing relative to families that do not." READ MORE: The wealth management industry's $1T conflict of interest The revenue sharing case winding through the courts Similar criticism pervaded the SEC's case against Commonwealth, which a federal district judge ordered to pay $93 million in disgorgement of revenue sharing income, prejudgment interest and a civil penalty based on the finding that the company failed to adequately disclose its conflicts. Between July 2014 and December 2018, National Financial Services, a trade clearing and asset custody unit of Fidelity Investments, paid Commonwealth more than $189 million in revenue sharing and other payments that Fidelity collected from outside fund management firms then paid to Commonwealth based on its clients' investments, court documents showed. "If Commonwealth had disclosed its economic self-interest to have clients hold more expensive share classes despite the availability of cheaper share classes in the same funds, then its clients would have had a clear economic incentive to convert to lower cost alternatives that would have paid less or no revenue to Commonwealth," the SEC said in a filing. "Instead, Commonwealth withheld this material information from deceived clients who continued to hold more expensive share classes while unaware of both the conflict of interest and the cost to their investments." U.S. District Judge Indira Talwani ruled in a summary judgment that the company generated much more revenue sharing than it would have if Commonwealth had fully explained to certain clients that they could choose lower-cost funds. Last March , she ordered the firm to pay disgorgement of $65.6 million alongside the other payouts. This April, Commonwealth won its appeal of the ruling, and the case was remanded for a possible jury trial. "We trust this decision validates the fact that Commonwealth and its advisors prioritize their client's interests and make investment decisions based on what they believe is best for their clients," Peggy Ho, Commonwealth's senior vice president, general counsel and chief risk officer, said in a statement. READ MORE: Amid regulatory rollback, advisor group seeks to restart AML debate Many in the industry will be closely following the case for any indication that their own revenue-sharing disclosures may be inadequate or could result in penalties related to their clients' choices of funds. The Financial Services Institute, a trade and advocacy group for independent wealth management firms like Commonwealth, filed an amicus brief in the appeal case. "FSI is product agnostic," spokesperson Allison Mutschler said in a statement. "Our amicus brief focused on the fact that the Commission sought to create specific disclosure obligations through a patchwork of staff guidance and settled enforcement actions as opposed to the established notice-and-comment rulemaking process. As stated in our amicus brief, this creates an opaque and unpredictable regulatory landscape where financial advisory firms that act in good faith — and the financial advisors who affiliate with and agree to be supervised by those firms — struggle to comply with shifting regulatory expectations." READ MORE: FINRA wants to narrow reporting rules on brokers' side hustles 'Modern conflicts' However that case turns out, some aspects of revenue sharing have emerged into the sunlight, while others stay in the shadows. The Morningstar report highlighted that while investors and their advisors were dropping or avoiding funds with "explicit fees for distribution and front-end loads that are shared back with brokers," new share classes — ones that paid revenue sharing without engaging in those other traditional conflicts — presented challenges for both investors and regulators. These "modern conflicts are much harder for regulators and the public to evaluate than traditional conflicts of interest," Mitchell and the other researchers wrote. "The SEC has not historically focused on revenue-sharing arrangements but rather on the once-typical practice of paying for distribution out of the expense ratio. Even though revenue sharing has not been heavily scrutinized, it has the potential to create a variety of distortions in the advice investors receive from brokers. Further, because of the lack of focus, the disclosures on revenue sharing are very limited and are presented in an open-end format that stifles efforts to summarize and quantify the wide variety of potential conflicts of interest they create." Six years later, the disclosures still leave many advisors, investors and experts struggling to understand some aspects of revenue sharing, Mitchell said. The advent of Reg BI led to a new disclosure document called a "customer relationship summary" that was supposed to clarify revenue sharing and similar arrangements, but there's still room for companies to make their disclosures "as investor friendly, as jargon-free, as plain English-language as possible" and "as specific as possible," she said. If firms don't report the exact amount of revenue sharing money, they could at least communicate the rough magnitude of them. "It's not just that the payment exists, but it's how much payment is there?" she said. "Those are important facets of this to consider, and that was not clear in the majority of the client relationship summaries, I would say." READ MORE: Financial planning clients are undefined, undercounted and underserved Investors should 'be suspicious,' while advisors should embrace transparency The confusion surrounding disclosures and associated regulations means that when considering mutual funds, advisors and investors must examine the arrangements as closely as they can, Frayer said. "Investors should be suspicious of revenue sharing the same way they would be suspicious of their doctor receiving commissions for prescribing a certain drug," he said. "These arrangements are too common, and they mean your financial advisor might be more interested in their compensation than your financial health." Sara Grillo, founder of the Transparent Advisor Movement It comes down to advisors figuring out how to fully communicate to clients the conflicts involved in revenue sharing, "so they understand fully what the effects may be," according to Grillo of the Transparent Advisor Movement. Doing so could feel strange, but clients can often be much more worried about whether they're on track for retirement, if they have enough money to take a vacation and the basic state of their investment portfolios, she said. "The [advisors] that do recognize this and have the conversation with their clients, it's a little bit of a virtue signal, but guess what? Some of the clients may not even care," Grillo said. "We cannot eliminate every single conflict of interest, nor would we want to burden ourselves or our clients with that task." Advisors are hardly alone in the need to address their conflicts. Professionals in any line of work — including doctors, lawyers and architects — have "a conflict with their client, because the professional has an interest in earning as much from the relationship as they can," according to Quinn of Cetera. In his view, the regulatory oversight of advisors has resulted in more disclosure and reduced conflicts compared with other fields. Revenue sharing has "evolved a lot over the years," but the topic isn't going away anytime soon, he noted. In the end, the murkiness surrounding the practice offers one more opportunity for advisors to educate clients. "When advisors bring this up, I say, 'Look, you should embrace this,'" Quinn added. "The more you tell people upfront about what you do and how you get paid and the potential conflicts it creates, it creates a healthier relationship and environment between you and your client."
Yahoo
27-04-2025
- Business
- Yahoo
If a financial adviser wants to roll over your retirement savings, watch out
If you ask 10 financial advisers how and where you should invest your tax-advantaged retirement savings, you may get 10 different answers. There are many options and it's not easy to know which one makes the most sense. The challenge grows if you're retired or nearing retirement. You may have accumulated a large nest egg, and advisers may recommend rolling over that pile of money into a different type of account. What a plunge in shipping traffic from China says about tariffs, stocks and the economy 'An argument ensued': My mother entrusted my inheritance to her second husband. That's when it all went horribly wrong. A cruel summer looms, but here's why JPMorgan still expects a higher S&P 500 finish this year 10 'pure value' stocks favored by analysts to soar 20% to 96% over the next year I held power of attorney for my late brother. Can I withdraw money from his bank account to give to his favorite charity? But rollovers can backfire. The stakes are high, given that a rollover is among the biggest, most consequential financial decisions you could make. The Financial Industry Regulatory Authority, or Finra, is increasing its scrutiny of advisers' rollover recommendations, especially those targeting retirees and seniors. When rolling over their retirement savings, older investors might unknowingly find themselves in worse shape than if they did nothing. The good news: Broker-dealers and registered representatives must follow Regulation Best Interest (Reg BI) when making rollover recommendations to clients. That means their recommendations must meet a standard of care in which they act in the client's best interest. Despite this regulation and Finra's oversight, risks remain. You may not realize that by agreeing to roll over funds (from, say, a 401(k), IRA or similar plan) into a different account, you can get hit with hidden fees, tax penalties, loss of investment options and other protections. 'Investors need to determine the total cost of a proposed rollover before they go ahead with it,' said Craig Ferrantino, a financial adviser in Melville, N.Y. Read: 'I really do not need the funds.' I'm 72 and facing RMDs in mere months, but I don't need the money or want the taxes. What's my move? List all the fees and expenses and compare it to your current plan's cost. Confirm the proposed rollover would not trigger any tax liability or penalties. The adviser's recommendations should include printed content that, in simple language and easy-to-understand graphs and tables, lets you compare the features, benefits, costs and tax consequences of various accounts and rollover scenarios. You may want to take the printed proposal and seek counsel from your accountant, attorney and others whom you trust. Consider how the adviser gets paid. Many of them charge an assets-under-management fee, typically around 1%. Read: 14 financial pros reveal the No. 1 money concern their clients are facing now If you're urged to transfer all of your assets (including your retirement funds) to their firm, calculate the total cost. Beyond paying their fee, ask about the expense ratio of the underlying investment products they recommend (which covers the funds' operating expenses, marketing, record keeping, etc.). Some advisers favor certain types of products or custodians, so make sure you understand the rationale for their rollover recommendation. They may funnel clients' retirement funds into one financial institution and get rewarded for their volume of business with that firm. Ask about the pros and cons of a range of different rollover strategies before you make a decision. And inquire about their motives. 'You should ask, 'Are there any sales incentives you get by recommending this?' and 'Do you have any conflict of interest in selling me this product?'' Ferrantino said. Fred Reish, an attorney and partner at Faegre Drinker, a Los Angeles-based law firm, advises retirement-plan participants to ask their financial adviser the following questions before authorizing a rollover: 'If the adviser doesn't give clear and comprehensible answers to these questions, that's a red flag,' Reish said. For example, plan fiduciaries have an ongoing duty to monitor the plan's investments, so the answer to the first question should be a straightforward 'yes.' He adds that when comparing the total cost of the proposed rollover with your current plan, treat even slightly higher-percentage fees as significant. 'If the total cost of the proposal, which should include the adviser's compensation, is much higher than your existing plan's cost, make sure there are additional services that justify the difference,' he said. 'Remember that an amount that seems small, say 0.5% or 1%, can add up to a lot of money over time.' More: 'I'm literally afraid to look at my balance': I have $300K in a 2025 target-date fund. Is there a chance it will recover? Also read: Are tariffs worth the risk to our retirement — and overall — economic security? 'I am suspicious': My father died, leaving me $250,000. My brother says it's all gone. What can I do? 'The whole thing feels predatory': My grandma, 97, pays $170 a month for a $10,000 life-insurance policy. Should we stop payments? My dying cousin supposedly 'fell in love' with his hospice nurse. She inherited his entire estate. How can this happen? My husband will inherit $180K. I think we should invest the money. He wants to pay off his $168K mortgage. Who's right? 'She acted as a mother to me growing up': My stepmother remarried after my father died. How can I claim my inheritance? Sign in to access your portfolio
Associated Press
16-04-2025
- Business
- Associated Press
InvestorCOM Launches the New RolloverAnalyzer to Enhance Compliance and Drive Rollover Asset Growth
Delivers expanded capabilities that empower advisors to efficiently assess, document, and support rollover recommendations with greater accuracy and confidence. 'We now have over 30,000 satisfied users on our platform, and these new capabilities will further increase the value we deliver to our partners.'— David Reeve, CEO, InvestorCOM BRANTFORD, ONTARIO, CANADA, April 16, 2025 / / -- InvestorCOM, a leading provider of regulatory compliance software for wealth and asset managers, is proud to announce the release of the New RolloverAnalyzer ™, the next-generation solution designed to help financial professionals meet the regulatory requirements of Regulation Best Interest (Reg BI) and PTE 2020-02 while enhancing the efficiency and growth of rollover transactions. Building on the success of its predecessor, the New RolloverAnalyzer delivers expanded capabilities that empower advisors to efficiently assess, document, and support rollover recommendations with greater accuracy and confidence. With over 30,000 users on InvestorCOM's compliance platform, the latest enhancements to the new RolloverAnalyzer will enable advisors to maximize this opportunity while ensuring full compliance with regulatory requirements. Key Enhancements of the New RolloverAnalyzer: - Enhanced UI, Customization and Analysis: A refined advisor experience for rollovers based on a Best Interest score driven by customizable service, fit, and plan cost criteria. Bringing clarity, consistency, and efficiency to rollover recommendations. Intelligent Automation: Streamlined documentation and oversight to reduce compliance burden while improving efficiency. - Facilitating Growth Through Consolidating Accounts: Advisors can now create a rollover from multiple sources, enabling a more efficient and scalable approach to rollover asset growth. - Compliance via Documentation and Dashboards: Built-in compliance features provide secure, automated documentation, record-keeping and reporting, ensuring regulatory readiness and auditability. 'We are very excited to be releasing the New RolloverAnalyzer, primarily because it represents our client's evolving requirements,' said David Reeve, CEO of InvestorCOM. 'The retirement industry presents a significant opportunity for wealth management, and the 401(k)-to-IRA rollover market alone is approaching $1 trillion in assets annually. We now have over 30,000 satisfied users on our platform, and these new capabilities will further increase the value we deliver to our partners. We are also thrilled to see the organic growth of rollover assets for our clients – on average, our clients are realizing 30% organic asset growth in rollover volumes and assets due to the efficiency of the New RolloverAnalyzer.' Firms using the New RolloverAnalyzer have already experienced significant improvements in both compliance readiness and business outcomes. InvestorCOM's New RolloverAnalyzer has been a game-changer for our firm,' said Rick Ohlrich, CCO RFG Advisory. 'Not only has it simplified our compliance process, but it has also allowed us to increase our rollover business by leveraging simple process and data-driven insights. The new enhancements provide even greater value, ensuring we are well-positioned to meet our regulatory obligations while maximizing client outcomes.' InvestorCOM remains committed to delivering best-in-class regulatory compliance solutions that align with industry trends and evolving client needs. For more information about the New RolloverAnalyzer, visit About InvestorCOM InvestorCOM is a leading provider of regulatory compliance software and communications solutions for wealth and asset managers. Our innovative technology suite supports the principles set out by regulators, enabling firms to meet compliance requirements while improving client outcomes. InvestorCOM's platform is trusted by thousands of advisors and firms to navigate the evolving regulatory landscape with confidence. Ankit Bhatia InvestorCOM Inc [email protected] Visit us on social media: LinkedIn Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
Associated Press
09-04-2025
- Business
- Associated Press
IMPORTANT NOTICE TO NVIDIA SHAREHOLDERS WHO WERE FORCED TO SELL STOCK DUE TO MARGIN CALLS
KlaymanToskes Investigates Forced Sales of NVDA Shares Due to Margin Calls Triggered by Market Volatility and Advisor Misconduct Nvidia Corporation (NASDAQ:NVDA) NEW YORK, NY, UNITED STATES, April 9, 2025 / / -- National investment loss and securities law firm KlaymanToskes announces an investigation into full-service brokerage firms and financial advisors on behalf of Nvidia Corporation (NASDAQ: NVDA) investors who suffered losses due to forced sales of NVDA shares as a result of margin calls. Nvidia investors who experienced significant financial losses as a result of forced sales of securities due to margin calls, or who believe their advisor may have engaged in unsuitable use of margin or negligence, should contact KlaymanToskes at (888) 997-9956 or at [email protected] for a free and confidential consultation to discuss potential recovery options. KlaymanToskes is investigating whether full-service brokerage firms and their financial advisors failed to provide full and fair disclosure about the risks associated with margin trading, recommended excessive use of margin in accounts heavily concentrated in Nvidia stock, and neglected to implement protective strategies such as diversification or hedging. The investigation also seeks to determine whether advisors allowed margin calls to trigger without providing proper notice or taking appropriate steps to manage the associated risks. Many Nvidia shareholders and employees hold significant positions in NVDA stock, often acquired through long-term employment, incentive compensation plans, or personal investment. For those who used margin loans secured by NVDA shares, recent volatility may have triggered unexpected margin calls, resulting in forced liquidations at significantly reduced prices. In these situations, financial advisors may have failed in their obligation to appropriately manage risk and disclose the potential consequences of margin trading, especially in accounts with highly concentrated positions. Under securities industry rules, and Regulation Best Interest (Reg BI), advisors must act in the client's best interest, which includes assessing whether margin use is suitable based on the investor's goals, risk tolerance, and liquidity needs. Investors who suffered losses as a result of forced sales of Nvidia (NVDA) investments due to margin calls, or who believe their advisor may have engaged in unsuitable use of margin or negligence, are encouraged to contact KlaymanToskes at (888) 997-9956 or by email at [email protected] in furtherance of our investigation. About KlaymanToskes KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $600 million in Securities Litigation and FINRA Arbitration matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico. Contact Steven D. Toskes, Esq. KlaymanToskes, P.A.
